MANAGEMENT DISCUSSION & ANALYSIS BY GROUP CEO Cont’d Earnings per share and net assets Earnings per share (“EPS”) for FYE 2021 and FYE 2022 were 12.41 sen and 17.16 sen respectively. The higher EPS in FYE 2022 was in tandem with increased profit attributable to shareholders. Meanwhile, net assets per share increased from RM0.48 per share in FYE 2021 to RM0.81 per share in FYE 2022. Dividends Total dividend pay-out in FYE 2022 was 6.0 sen as compared to 3.4 sen in FYE 2021. We are committed to rewarding shareholders for their continuous support subject to our profitability, capital expenditure requirements and overall liquidity position. MARKET UPDATES 2022 presented one of the most volatile aluminium price trends in recent memory due to various factors, including the energy crunch aggravated by the Russian-Ukraine tensions, inflation driven interest rate hikes resulting in strong US Dollar and softened demand due to recession fear. At the start of the year, LME prices shot up to above USD3,800 per tonne after Russia invaded Ukraine in February. It later witnessed a pullback as demand concerns surfaced with macroeconomic uncertainties and escalating inflationary pressures. Unaccommodating supply-chain disruptions worsened the situation as it interrupted components supply to various industries causing lower production output. Despite the challenging backdrop, global demand for primary aluminium registered a marginal growth rate in 2022. The transportation and construction sectors were the key demand drivers in 2022, making up close to half of the market demand. The electrical, packaging and foil stock industries were other prominent sectors for aluminium demand. The renewable energy sector is set to become a growth engine for aluminium demand because of solar PV and wire rod from infrastructure spending on transmission lines. The application for aluminium is vast and it has been replacing traditional materials. Even though global demand from the construction sector softened last year, it still contributed a significant portion to total aluminium demand. Going forward, government initiatives such as the US Infrastructure Bill or supportive policies towards the property market from Chinese government are some drivers in reviving demand from the sector. For the first three quarters of 2022, soaring energy prices and power shortages were putting supply in check, especially in Europe. Several smelters have reported production curtailments or shutdowns in Europe and US, pressured by margin squeeze. Going into 2023, we believe supply tightness will persist, especially in Europe, due to the scarcity of renewable energy and the deficiency of reliable energy supply amid ongoing Russia-Ukraine tensions. Although China increased production capacity last year, weather constraints continued to curtail output intermittently, posing a risk to global supply. With a relatively low visible world inventory of aluminium, any demand recovery led by influential economies will underpin a stronger aluminium price performance as the scarcity of renewable energy and high energy cost will preclude the massive restart of curtailed smelters. RISK FACTORS & RISK MANAGEMENT Anticipated or known risks The business risks that may significantly impact our performance are the adverse changes in aluminium prices and foreign currency rates as our primary aluminium and value-added products are indexed to LME aluminium prices and quoted in USD. Other financial and market risks are those related to financing our Group’s activities such as interest rates. We also face operational risks directly or indirectly relating to our core operating activities due to inefficient or ineffective business processes, systems or human errors. ANNUAL REPORT 2022 18
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